Digital Advertising Trends in APAC

© 2017 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential.
Methodology
Most comprehensive and accurate report of its kind in the industry
 Report based on analysis of 250 billion visits to over 3,000 websites (Jan. 2014 to March 2017)
 3.0 billion video ad impressions from India, Japan, Australia and South Korea
 100 billion responses to paid searches
 ADI Summit Survey 2017:
 Email survey with 1,000 consumers over the age of 18 in each of the following countries:
 Australia, India and South Korea; conducted Feb 1-17
 Digital Marketing email survey in Australia, India and South Korea (Feb 1-17, 100 per country) of those with
influence over the purchase of digital advertising.
Data from different Adobe solutions:
Based on analysis of aggregated and anonymous data
Adobe
Analytics
Adobe Media
Optimizer
Adobe
Analytics Cloud
Adobe
Advertising Cloud
Adobe
Marketing Cloud

Key Insights
1
Digital advertising costs continue to rise, and search costs have increased 2x faster than inflation in
the past two years.
2
Competition for consumer attention and new site visitors will increase as topline
growth starts to slow and time on site decreases.
3
The digital disconnect persists. Marketers rate themselves better than consumers do for delivering relevant
and interesting ads. Consumers desire personalization, but delivery and privacy issues exist.
4
Advertisers are still not organized to deliver on consumer’s advertising expectations and lag behind US
counterparts in terms of automatic/programmatic spend.
5
Without growing markets, pressure mounts on brands to protect their loyal consumer base and to
steal from the competition.

EMBRACING THE OPTIONS
Slowing Growth Means Competition Will Heat Up on the Smartphone Battlefield
As the internet saturates abroad, competition for
traffic will become necessary
 Total visits to APAC websites increased 36% over the
past 36 months, but the trend is slowing down –
quickly
Smartphone is the primary device for connecting to
brands
 Smartphone visits increased +145% since 2014, while
visits from desktops and tablets eroded (-9% and
-5%, respectively)
 This trend pushed total mobile share of traffic to
54% in Q1 2017
4

EXPENSE OF ADVERTISING
Search Costs Outpace Inflation by 2x
Cost per click continues to exceed inflation
 Inflation in APAC: 6.3% since 2013
 Search CPCs rose sharply in 2014 and then
retreated to current rates: desktop 11%, mobile
16% (relative to Q4 2013)
Advertising costs began to outpace inflation with
the advent of the digital era
 The cost of reaching consumers on traditional TV
began outpacing inflation in the late 1990’s when
technology started changing our lives
5

A SHIFT FROM THE TRADITIONAL
Search Remains a Tried-and-True Channel for Acquiring Site Traffic
6
Search traffic continues to grow faster than spend in
Asia-Pacific, unlike the trends in the US
 Advertisers have increased spend on search by +6%
over the past two years
 Site visits driven by search have increased by +30%
indicating more bang for the buck
 The US may be a harbinger of things to come - it
costs more money to get less traffic in the US’s
saturated market
As traffic moves to smartphones, consumers spend
less time on web sites
 Indian consumers changed their patterns the most,
spending 47 (-12%) fewer seconds on site
 Hong Kong and Japan saw decreases in time spent
similar to those in the US
 HK: -19 seconds (– 5% YoY)
 Japan: -17 seconds (-4% YoY)
 US: -18% seconds (-6% YoY)

DIGITAL VIDEO AD OPPORTUNITY
Marketers Continue to Deploy Mobile Video Ads As Costs Increase
7
Mobile video ad campaigns cost 36% more than last
year; desktop CPMs are down 13%
 Q4 2016 showed equal growth in the delivery of
mobile and desktop-formatted ads (+7% YoY)
There’s the risk of losing attention as mobile video ad
completion is 24% lower than on a desktop (55% vs.
68%, respectively)
 Asia-Pacific consumers are pickier than their US
counterparts, completing 4% fewer videos on mobile,
and 9% fewer on desktop
 Some factors are involved that advertisers need to
consider:
 Skippable and auto-play preferences
 Better targeting and fewer impressions delivered
relative to the audience

FIRST IMPRESSIONS
Advertisements Must Pique Interest During Critical First Few Seconds
8
Opening seconds are critical for capturing
attention
• 22% of viewers move on after a mobile
video ad has played for five seconds
• The US figure (19%) is slightly lower
Consumers might be missing the point of the
advertisement
• Just over half (55%) of 30 second mobile
ads are viewed to the end
• The “call to action” is completely missed if
placed at the end of an ad – this raises the
effective cost of mobile video ads

CONSUMERS CONTROL THE DRIVER’S SEAT
New Customer Traffic Coming From Emerging Channels More and More
9
Generations recognize interesting and relevant ads in
different environments
 Younger generations equate social media to the source
of new information (41%)
 Older generations are most likely to notice relevant ads
when browsing for information (47%)
Social continues to grow, up 33% in Travel and
31% in Retail
 Traffic generated from social networks is only
the tip of the iceberg given its strength in
branding

THE DIGITAL DISCONNECT
Advertisers Often Think They Are Doing Better But Consumers Don’t Agree
10
Consumers’ opinion: there’s room for
improvement
 Less than half of the consumers think
advertisers are doing better than 2 years ago
at delivering relevant ads
In Australia and India, advertisers disagree
with consumers on advertising performance
 Marketers believe they are doing a better
job than consumers do
 Australia: 51% to 38%
 India: 63% to 48%
 South Korea: 48% to 50%
Similar gap in the US
 Over half (58%) of advertisers believe they’re
doing better at serving valuable ads; only 38% of
consumers agree

THE DIGITAL DISCONNECT
Personalization Gap: Desire – Delivery = Opportunity
11
 Over half of consumers prefer personalization
 Nearly 2 out of 3 (65%) of the 18-34 prefer
ads based on their interests/preferences
 Even the oldest segment favors
personalization over not doing it
 The gap between “not good enough” and
“want it” suggests room for improvement
 The gap is large enough among both age
groups to warrant experimentation,
particularly among 18-34
Desire is there. Delivery is mixed.
 A third of the younger group doesn’t believe
personalization is done well enough
 Older consumers are more likely to be
against any personalization, though 1 in 5
(22%) think advertisers can improve
Opportunity exists.

Less than half of consumers are comfortable
with exchanging personal data for customized
experiences
 1.2x higher among younger consumers
(47%) than older consumers (38%)
Belief that marketers respect privacy is even
lower – just 1 in 3 (33%) agree with the
statement
 1.1x higher among younger consumers
(35%) than older consumers (31%)
12
DATA SHARING
Privacy Issues Present a Road Block to Personalization

© 2017 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential. 13
I see your product…so what?
 Consumers are most likely attracted by ads that
focus on product benefits
 Consumers say that personalized, funnier ads would
also improve their experience
PERSONALIZATION
Consumers Seek Practical, Personal Ads
Leverage where consumers expect good advertising
 57% say Facebook is the social media site doing the
best job of showing them interesting and relevant
ads

HISTORICALLY SILOED
Fragmented Organizations and Technology Limit Advertising Progress
14
41%work with 3 or more
creative agencies (US 42%)
36%work with 3 or more media
planning platforms (US
40%)
35%work with 3 or more media
buying platforms (US 41%)
36%work with 3 or more data
management platforms (US
37%)
analytics platforms (US
44%)
attribution platforms (US
38%)
(Source: ADI International Summit Survey 2017)

Advertising still a manual process in APAC
 Fewer than 1 in 5 APAC advertisers (19%)
spends more then 51% of their budget
programmatically. In the US it is 1 in 3.
 There’s an opportunity to learn from early
adopters and effectively grow their
programmatic ad presence across channels
Put money where there is growth
 Smartphone investments need to improve;
75% of APAC marketers think they
underinvested in smartphone advertising
AUTOMATED MARKETING
APAC Lags Behind US In Programmatic Ad Spend

Return on ad spend (ROAS) tops list of
marketer concerns
 ROAS is the most cited concern when it
comes to media buying in APAC, with over
50% saying it’s an area in which they face
the biggest challenge
Brand marketers are more concerned than
their supply-side counterparts
 Regarding ROAS, brand marketers across all
surveyed APAC countries are the most
concerned
GETTING YOUR MONEY’S WORTH
Marketers Need To Know The Value of Their Investments

THE LONG TERM DECISION
Make Sure to Protect the Base and Get to Conversion
17
Customers tend to stick with their favorite sites,
and they return often
 8 out of 10 customers are likely return
 In the US, only 7 out of 10 are likely to return
Visitor drop off is harder to tackle
 Only 1 out of 4 visitors (non-customers) will
come back if they didn’t buy/order an item
 US non-customers are more likely to return, with 3 out of
10 choosing to do so
 Marketers should ensure targeting attracts the
right customer and that the experience creates
the desire to return

Appendix
18

Glossary
19
1. Click Through Rate (CTR): Clicks divided by impressions
2. CPM: Cost per thousand impressions
3. CPC: Cost per click
4. Completion Rate: Ads completed (100%) divided by impressions
5. Growth: Percent change from base period
6. Customer: Visitor who has made one or more purchases in Retail or bookings in Travel
7. Non-Customer: Visitor who has not made a purchase or booking
8. Frequency: How often someone visits a website
9. Web Traffic or Visits: Visits occurring to a website via any mobile device; exclusive of app traffic

Marketer: For the following ad channels, what portion of your total advertising budget is allocated towards
automated (programmatic) channels? (Percent answering 51% or more)
Traditional
TV
Connected
TV
Desktop
Video
Mobile
Video
Out-of-
home
Search Display Social
US 35% 35% 37% 40% 31% 39% 38% 41%
Australia 9% 10% 11% 17% 12% 14% 12% 20%
India 25% 29% 26% 31% 23% 31% 38% 38%
South Korea 3% 6% 11% 14% 8% 20% 19% 25%
APPENDIX
Data Tables

Marketer: Compared to two years ago, how would you rate your ability to effectively reach consumers
with ads they find valuable or compelling? (Data table shows percent that rate themselves as “better than
2 years ago”)
21
Brand
Advertising agency /
Technology provider /
Publisher
Australia 55% 31%
India 74% 55%
South Korea 59% 39%
US 59% 56%
APPENDIX
Data Tables

APPENDIX
Data Tables
22
Australia India South Korea US
Brand
Advertising agency
/ Technology
provider /
Publisher
Brand
Advertising agency
/ Technology
provider /
Publisher
Brand
Advertising agency
/ Technology
provider /
Publisher
Brand
Advertising agency
/ Technology
provider /
Publisher
Media quality (brand
safety, ad fraud,
viewability)
36% 35% 61% 46% 57% 35% 50% 49%
Integrated data and
media buying solution
45% 29% 50% 45% 45% 33% 40% 51%
Accurately measuring
return on ad spend
(ROAS)
66% 52% 54% 45% 57% 40% 46% 39%
Economic transparency 41% 32% 30% 57% 52% 47% 44% 51%
Data leakage 39% 39% 61% 27% 34% 40% 31% 34%
Data ownership 18% 16% 26% 32% 16% 26% 31% 30%
Media independence 9% 19% 9% 9% 5% 7% 7% 5%
Marketer: Three biggest challenges in media buying

Marketer: In terms of 2016 media spend - where marketers think they underinvested in 2016
Brand
Advertising
agency /
Technology
provider /
Publisher
Brand
Advertising
agency /
Technology
provider /
Publisher
Brand
Advertising
agency /
Technology
provider /
Publisher
Brand
Advertising
agency /
Technology
provider /
Publisher
Desktop advertising 19% 28% 61% 70% 45% 45% 64% 61%
Smartphone advertising 78% 62% 92% 88% 62% 67% 83% 80%
Tablet advertising 67% 48% 67% 68% 36% 33% 58% 71%
Linear TV 53% 45% 44% 68% 36% 27% 56% 52%
Other 0% 0% 0% 0% 2% 0% 3% 0%
APPENDIX
Data Tables

18-34 35+ 18-34 35+ 18-34 35+ 18-34 35+
Ads focused on product
benefits 17% 18% 36% 49% 40% 43%
22% 26%
Ads focused on price 17% 14% 18% 9% 16% 13%
17% 9%
Ads that speak to my
values 18% 13% 25% 21% 12% 20%
15% 13%
Ads that make me laugh 38% 40% 20% 18% 24% 18%
37% 35%
None of the above 11% 14% 0% 2% 7% 5%
9% 17%
Consumer: What types of ads are most likely to attract your attention?
Consumer: When do you tend to see the most interesting, relevant online ads today?
18-34 35+ 18-34 35+ 18-34 35+ 18-34 35+
While using social
media (website or
mobile app)
43% 22% 45% 34% 36% 22% 50% 20%
While web browsing
for information
28% 50% 31% 39% 35% 50% 30% 55%
APPENDIX
Data Tables

18-34 35+ 18-34 35+ 18-34 35+ 18-34 35+
If they were shown to
me less frequently
27% 29% 22% 22% 14% 12% 29% 40%
If they were better
personalized to me
21% 10% 36% 29% 32% 28% 22% 11%
If they spoke more to
my values
16% 17% 24% 29% 16% 21% 16% 12%
If they were funnier 28% 26% 17% 16% 33% 32% 24% 20%
None of the above 9% 18% 0% 4% 5% 7% 9% 17%
Consumer: Which of the following would most improve the ads you see online?
Consumer: I agree that marketers today are usually respectful of my digital privacy (Net Agree)
18-34 35+ 18-34 35+ 18-34 35+ 18-34 35+
Net
Agree
25% 18% 63% 54% 17% 22% 29% 12%
APPENDIX
Data Tables

Consumer: For brands I use regularly, I am comfortable with them using my personal data to customize website
content, emails, and advertising (Net Agree)
Consumer: Compared to two years ago, I agree that advertisers are better at
showing me ads I find valuable or compelling (Net Agree)
18-34 35+ 18-34 35+ 18-34 35+ 18-34 35+
Net Agree 39% 22% 69% 59% 32% 33% 42% 24%
APPENDIX
Data Tables
18-34 35+ 18-34 35+ 18-34 35+ 18-34 35+
Net Agree 40% 37% 46% 50% 50% 51% 43% 36%

Consumer: I prefer to see ads that are personalized based on my interests, shopping habits, and
preferences
Consumer: Consumers’ attitude towards the personalized ads they receive
18-34 35+ 18-34 35+ 18-34 35+ 18-34 35+
Net Agree 53% 36% 80% 73% 63% 53% 57% 41%
Net
Disagree
19% 32% 12% 10% 14% 16% 19% 32%
18-34 35+ 18-34 35+ 18-34 35+ 18-34 35+
I don’t think ads
should be personalized
23% 47% 7% 19% 10% 22% 17% 39%
Ads are not
personalized well
enough
32% 14% 42% 31% 23% 21% 31% 18%
APPENDIX
Data Tables

US Sources of Website Traffic

Digital Advertising Trends in APAC

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